For Ontario’s economy, good is not good enough

November 28, 2013

In 2001, then-premier Mike Harris created the Task Force on Competitiveness, Productivity and Economic Progress to measure and monitor Ontario’s performance in those areas compared to other provinces and U.S. states. The government understood about productivity what Nobel Laureate Paul Krugman asserted in 1994: that it “isn’t everything, but in the long run it is almost everything.”

By comparing Ontario to peer jurisdictions, our government hoped that policy-makers, business leaders and individual Ontarians would have the information and the impetus to make the decisions necessary to improve our economy.

Back in 2001, Ontario ranked 14th out of 16 North American peers and sixth out of 13 non-North American peers for an overall ranking of 19th out of 28 global peers.

Today, in 2013, after multiple economic cycles, downturns and periods of growth, four premiers and numerous reports, Ontario still ranks 19th out of 28 global peers.

This means that we aren’t closing the gap on our competitors. It means less money in the public purse and fewer dollars in Ontarians’ pockets. It means we, as a province, aren’t living up to our economic potential.

In its 12th annual report, the Task Force identifies a number of key measures needed in both the private sector and government to get Ontario’s economy on the right track. While the province has laid a solid economic foundation, with a competitive tax structure and key investments in human capital, more must be done in order to compete. Business leaders can no longer be complacent with the province’s current levels of investment and productivity. Key areas such as information and communication technology investment and worker training are calling out for attention. Business investment in productivity-enhancing equipment in manufacturing and services alike is required. Overall, the whole of Ontario’s private sector needs to be the engine for growth not just a few sexy hi-tech sectors.

Government can play a significant role in providing the fuel for that engine. The Task Force recently put out a report advocating for tax reforms that tackle some economic myths currently guiding public policy in Ontario and pushes for changes that would enhance the province’s productivity. The question is not whether Ontario taxation is too low or too high overall. The question is how can Ontario’s tax structure continue to become ever smarter for growth and prosperity? And it can.

Another area where government can play a significant role is in ensuring that those entering the labour force have the right skills to become innovative and entrepreneurial economic agents. Students today need a combination of job preparation and a well-rounded skill set that will help them succeed in the ever-changing workplace. In a century in which the success of advanced economies like ours is going to depend on relentless innovation, Ontario’s students must be taught systematic approaches to innovating in whatever context they end up working.

The field is wide open for Ontario to lead the world in providing broad-based innovation education to its students. There is urgency: Ontario’s high youth unemployment — 16.9 per cent in 2012 — and lagging labour productivity are prime signals that better human capital development is strongly needed to build the province’s future prosperity.

There is so much to be proud of in our province and opportunities for progress abound. From our talented people to the economic potential of the Ring of Fire or our agri-food sector, there is no shortage of causes for optimism. It will take leadership from the private and public sectors as well as dedication by the Ontario electorate to make these opportunities come to life.

Often, the fractious nature of the political debate in the province diminishes hope that a clear economic mission can be pursued. As is always the case, there is an opportunity to rise above divisiveness and find a compelling way forward. All of Ontario’s individuals and institutions have challenging tasks ahead of them to build a brighter future for the province. Good is no longer good enough to compete.

Article by Roger Martin, chair of the Ontario Task Force on Competitiveness, Productivity and Economic Progress. This article is also featured on the Toronto Star.